Friday, October 08, 2004

MONEY FOR BOTH JAM, AND OLD ROPE: We've had sat on our pad the words 'Orlowski City' for over a week now, as The Register's Andrew Orlowski made a speech at In The City suggesting that Record Companies should be as happy as pigs in clover right now. A lot of what of he said made good sense - the labels should be thinking about how they're going to combine their massive libraries with new technology and make a fortune. But he's got some stuff wrong, too, we think.

He thinks iTunes/Napster is bound to fail in the medium to long term, for various reasons. First of all, it "unpicks the bundle." Orlowski belives that there's a serious threat to the industry in freeing listeners from having to buy a collection of songs, CD-style; his theory is that the economics of recorded music will be smashed back to the 1950s if you give consumers the power to only take the tracks they want.

But this is based on the fallacy that there's something organic about the length of CDs or LPs. Of course there isn't, though - the LP is as long as it could be without the sound degrading too much; the length of the CD is an even more arbitrary choice, related to some measure or other of a classical music piece. Sure, if you say to people they no loner to buy every track from an album in one go, you might end up selling far fewer copies of the one where they let the drummer record one of his songs. That could be bad.

However, it doesn't have to mean economic meltdown. While the average album contains, shall we say, four tracks which will tempt people to buy them as singles, and probably two tracks you couldn't give away, there's usually going to be some middling tracks, too. Now, in the past, bundled as an album, you would find it hard to flog the whole lot to loads of people on the basis of the middling tracks - they'd be happy with the singles. In the new world, freed from the need to take the whole lot for a tenner, you could find yourself selling a lot more of the middling tracks as a download. After all, that version of the Joker from the new Fatboy Slim album isn't going to persuade anyone wavering to buy the whole album, but it's worth 75p of anyone's money.

In addition, freeing the world from the concept of the ten track bundle means that artists can actually stick dozens and dozens of tracks online. Yes, they might not sell as many sets of tracks as if they stuck out an album, but because they no longer have to shape what they're making available to a seventy-four minute limit, they might well wind up selling a lot more individual tracks to fans than they would have as limited bundles.

Orlowski makes some interesting suggestions about where the future is lying technologically - the iPod will be replaced by phones, and even if the record industry tries to block the technology here and in the States, the Chinese are waiting in the wings. More importantly, he points out that if Bill Gates ever does manage to build a version of Windows which secures intellectual property rights (and it's a slim hope; he can't even build a browser which doesn't spew your privacy out the back of your PC) all he'll have done is create a product which makes Linux look more attractive than ever. And Orlowski is dead right - Gates could buy up all the music industry tomorrow, with the cash he keeps under the clock on mantle. If the RIAA really think he's going to make a product which protects their market at the cost of his own, they're even more doofed out than we thought.

We diverge from Orlowski, however, when he recommends that the Record Industry lobby for some sort of tax - on broadband, or phone bills, or anything. He suggests it could be as "little" at 28p a week. But whether its 28pence or thirty pounds, this is a ridiculous proposal that must sound like Santa has arrived down at the BPI. Why on earth should taxation be raised for the benefit of private companies simply because they've screwed up their own industry by playing a mishanded strategy? And why on earth should all broadband users start to help inflate EMI's shareholder value? Making mobile phones more expensive because Universal failed to seize the moment when it was told where the future lay?

Of course, some people might see this as analagous to something as harmless as the licence fee - where you pay some cash towards the BBC regardless of if you watch any BBC programmes or not, simply because you have a TV. There is a crucial distinction, though: the BBC is not a private company, and the cash raised from the licence fee is clearly meant to be used for the public good - not to pay shareholders, not to invest in populist pap for the mass market. You might argue about how well the BBC lives up to the duties its licence fee gives it, but the principle is clear enough. Under the Orlowski model, though, taxation would be raised, and passed to the labels, and they could do what the hell they chose with it - your grandad, who only uses his broadband connection to listen to a small jazz station, would find his tax dollar going towards creating mass-market bilge.

So, if the music industry wants to be funded through public taxation, fair enough: but then it must become a public resource. If the BPI wishes to have access to a slice of my phone bill, great - provided it's going to be using the cash for the public good. The concept of tax being raised on behalf of private companies is clearly wrong - so the only answer would be to nationalise the music industry. I don't think it's what they'd want, but it's clearly the only acceptable solution. In fact, the more I think about it, the more I start to like the idea. The logic of the argument is that you can get rid of piracy and the whining of the record executives at a stroke.

But since that's not likely to happen, we come back to the ridiculous idea of fleecing the public to prop up companies who've screwed up. The big O thinks there might be other objections, and tries to head them off:

PUBLIC: No job is guaranteed. Why should I give the pigopolists a job for life? - A: Record companies simply own the recording rights: they've paid for them, after all. So buy the recording rights from the record companies. That market is open for business.

If this sounds vaguely familiar, it's probably the echo of Hugh Laurie in the sketch where he's trying to raise a loan from the bank to sell smack to kids because "Europe is open for business." Let's not even bother getting into the at best dubious terms of trade which allow the record companies to claim ownership of music long after they've made back their initial investment, and then some profit, and then more. Under the Orlowski plan, record labels will be pulling in cash simply for doing nothing - and if that won't distort a market, I don't know what will.

- PUBLIC: I never listen to music. Why should I pay for it? - A: I don't have a car or children, but I pay for your schools and roads. Knowing roads and schools are there is an incentive to join you. It's a public good, so you might want to start enjoying music now.

Well, yes, music is a public good. But while it's not quite fair to compare music with schools, you've done it. If a supply of music is vital to the public infrastructure - and yes, it is - then why should that supply be left to private companies? (We were going to say nobody would be stupid enough to pass tax funding to private, profit-driven companies to provide schools, and then we remembered Jarvis and the Public Finance Initiative, which might disprove the point, but underlines what we were trying to say).

There's a lot more in his speech, and its well worth a flick through. His problem is that he can picture a different technological world, but still has the same corporate structure at its heart. Coming up with proposals that support the current big companies in the music industry does nobody any favours - not music fans, not musicians, and, ultimately, by shoring up companies who failed to adapt when warned nearly a decade ahead of the risk to the bottom line and choking off the chance of new forms of music company to rise up, not even the people whose pension funds are invested in the business of shifting units.


Anonymous said...

"the only answer would be to privatise the music industry"

"nationalise", surely?

Aaron said...

The other problem with taxation is that every entertainment industry (film, tv, publishing) will face this problem eventually, and they'll all demand a slice of the cake.

Simon Hayes Budgen said...

Oh... yeah... nationalize. That's what we meant, of course. Well, actually what we meant was communalize...

Anonymous said...

Excellent discussion on internet connections. I bookmarked your blog. I have my own internet connections blog if you want to take a look.

Post a comment

As a general rule, posts will only be deleted if they reek of spam.